Retrofits adds $1.7 billion to cost of F-35 GAO Report
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Exclusive - Retrofits to add $1.7 billion to cost of F-35: GAO report 09 Mar 2013 By Andrea Shalal-Esa | Reuters
http://uk.news.yahoo.com/exclusive-retr ... nance.html
"WASHINGTON (Reuters) - Retrofits of F-35 fighter planes to fix problems found in flight testing will likely top $1.7 billion, a U.S. government watchdog said in the draft of a new report about the Pentagon's Joint Strike Fighter program.
Extensive restructuring efforts and progress on technical issues have put the Lockheed Martin Corp F-35 program on a more solid footing, but the plane's long-term affordability remains a big concern, the Government Accountability Office said in the draft, a copy of which was obtained by Reuters....
......The GAO draft report offers the agency's most positive outlook yet for the Pentagon's most expensive weapons program, which has seen a spate of negative news in recent weeks, including two engine-related groundings this year....
..."Overall, the F-35 Joint Strike Fighter program is now moving in the right direction after a long, expensive and arduous learning process," GAO said. "Going forward, ensuring affordability - the ability to acquire aircraft in quantity and to sustain aircraft going over the life cycle - is of paramount concern."...
...The program faces substantial costs to retrofit planes to address problems discovered in flight testing, GAO said.
Such "rework" would add $900 million to the cost of the first four batches of jets build by Lockheed, GAO said, plus about $827 million over the next six batches for a total of $1.7 billion.
Last June, GAO had forecast rework costs of $373 million for the first four batches of jets, but gave no estimate for the remaining batches.
Lockheed agreed in its contract for a fifth batch of jets to pay for 55 percent of any cost overruns up to a certain ceiling, and all cost overruns beyond that. Retrofit costs are now shared equally by the Pentagon and the contractor.
COST OVERRUNS SEEN REACHING $1.2 BLN
GAO said cost overruns on 63 planes built by Lockheed in the first four production batches were now expected to reach $1.2 billion, of which the government will have to pay about $756 million. That marks an increase from GAO's last estimate in June 2012, which forecast a cost overrun of $1.04 billion...."
LOTS more at the URL so best read it all there. Thanks.
____________
ADDITON: Similar info on many sites now with this website have this final paragraph:
http://www.ibtimes.co.uk/articles/44425 ... 35-lig.htm
"A final report by GAO is anticipated next week."
http://uk.news.yahoo.com/exclusive-retr ... nance.html
"WASHINGTON (Reuters) - Retrofits of F-35 fighter planes to fix problems found in flight testing will likely top $1.7 billion, a U.S. government watchdog said in the draft of a new report about the Pentagon's Joint Strike Fighter program.
Extensive restructuring efforts and progress on technical issues have put the Lockheed Martin Corp F-35 program on a more solid footing, but the plane's long-term affordability remains a big concern, the Government Accountability Office said in the draft, a copy of which was obtained by Reuters....
......The GAO draft report offers the agency's most positive outlook yet for the Pentagon's most expensive weapons program, which has seen a spate of negative news in recent weeks, including two engine-related groundings this year....
..."Overall, the F-35 Joint Strike Fighter program is now moving in the right direction after a long, expensive and arduous learning process," GAO said. "Going forward, ensuring affordability - the ability to acquire aircraft in quantity and to sustain aircraft going over the life cycle - is of paramount concern."...
...The program faces substantial costs to retrofit planes to address problems discovered in flight testing, GAO said.
Such "rework" would add $900 million to the cost of the first four batches of jets build by Lockheed, GAO said, plus about $827 million over the next six batches for a total of $1.7 billion.
Last June, GAO had forecast rework costs of $373 million for the first four batches of jets, but gave no estimate for the remaining batches.
Lockheed agreed in its contract for a fifth batch of jets to pay for 55 percent of any cost overruns up to a certain ceiling, and all cost overruns beyond that. Retrofit costs are now shared equally by the Pentagon and the contractor.
COST OVERRUNS SEEN REACHING $1.2 BLN
GAO said cost overruns on 63 planes built by Lockheed in the first four production batches were now expected to reach $1.2 billion, of which the government will have to pay about $756 million. That marks an increase from GAO's last estimate in June 2012, which forecast a cost overrun of $1.04 billion...."
LOTS more at the URL so best read it all there. Thanks.
____________
ADDITON: Similar info on many sites now with this website have this final paragraph:
http://www.ibtimes.co.uk/articles/44425 ... 35-lig.htm
"A final report by GAO is anticipated next week."
Last edited by spazsinbad on 10 Mar 2013, 05:24, edited 1 time in total.
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I would like to see the detailed basis for their cost claims.
As previously explained elsewhere: whilst acknowledging the risk involved with concurrency, one must also take some of the reporting with a good dose of salt. It should also be understood that such a risk is inherent in all programs where development is occurring concurrent to production. In the case of the F-35 though, the reporting of this risk and the cost supposedly involved has been blown out of proportion. Why do I say this? Well for one, the way these items have often been costed does not reflect the way things happen in the real world. In much of the reporting the costs used for this are based upon each issue being corrected individually as a stand-alone event. In the real world though, you try to resolve as many issues as possible at the same time and often where possible at scheduled maintenance downtime. Think of it as though you were taking your car in to be serviced and at the same time wanted them to fix some minor squeaks and rotate and align the tyres. Where possible you try to get all of these things done at once. You certainly don’t have the car serviced on one day, schedule another session for the tyres on another day and lastly schedule each squeak/repair to be done on a separate day(s) yet again. However, with the concurrency costs reported to date for the F-35, that is just what people are seemingly expecting to happen!
As previously explained elsewhere: whilst acknowledging the risk involved with concurrency, one must also take some of the reporting with a good dose of salt. It should also be understood that such a risk is inherent in all programs where development is occurring concurrent to production. In the case of the F-35 though, the reporting of this risk and the cost supposedly involved has been blown out of proportion. Why do I say this? Well for one, the way these items have often been costed does not reflect the way things happen in the real world. In much of the reporting the costs used for this are based upon each issue being corrected individually as a stand-alone event. In the real world though, you try to resolve as many issues as possible at the same time and often where possible at scheduled maintenance downtime. Think of it as though you were taking your car in to be serviced and at the same time wanted them to fix some minor squeaks and rotate and align the tyres. Where possible you try to get all of these things done at once. You certainly don’t have the car serviced on one day, schedule another session for the tyres on another day and lastly schedule each squeak/repair to be done on a separate day(s) yet again. However, with the concurrency costs reported to date for the F-35, that is just what people are seemingly expecting to happen!
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Bogdan said a couple of things on concurrency and the VSI helmet during his 21 Feb presentation to the partners.
Press material from http://www.regjeringen.no/nb/dep/fd/tem ... ?id=715294
Slow But Steady Progress
Lower costs than expected and much lower estimates of future expenses were among the good news the new program director of the international F-35 program had in the bag when he on Thursday 21 February held an orientation briefing for partners during a summit in the United States. Lieutenant General Christopher Bogdan could include telling that cost estimates related to the so-called concurrency changes has been reduced by 30%, and that the actual cost so far has been far below even this level.
- I think there were many of those who have accepted early production aircraft breathed a sigh of relief when they saw those numbers, said Brigadier Morten Klever Deputy Chairman of the Norwegian fighter program and representing Norway in the meeting.
- This shows that concurrency changes, ie the need to go back and make changes in aircraft that are already built when the test program reveals deficiencies, has been shown to cost much less than first feared. The program has therefore revised down estimates for how much you should expect to spend on such changes in the future with 30%, and the actual costs incurred for such changes so far suggests that they may be even lower, explains Klever.
The illustration shows the reduction in estimated costs from 2011 (blue) and 2012 (red) - total estimates are reduced 30%. (Source: Joint Project Office)
- This is also very positive for Norway when it suggests that the need for such changes in the Norwegian aircraft will be very small, and perhaps even less than we have taken into account. It also suggests that the structure of the plane is not as immature as many critics claim.
The unit price is reduced
Lieutenant Bogdan also said that the cost of each aircraft has been reduced much faster than the current plan had assumed.
- Right now is the cost of F-35 is actually below where they had hoped to be at this time, so it's probably an indication that the trend is moving in the right direction. From the production line 6 (LRIP 6) will also aircraft ordered under the fixed-price contracts that we not risk getting any overruns in contract on the Norwegian aircraft, said Klever.
Norwegian aircraft will be delivered from the production line 7 (LRIP 7) and will be covered by such fixed-price contracts.
The curve shows the reduction in costs for each aircraft (without engine) in each production contract. The bottom line is the actual contracts. The middle line is the final cost for each aircraft (Source: Joint Project Office)
The curve shows the cost reduction over time for F-35 engine. The red curve shows the planned level, blue shows the engine cost has been on. (Source: Joint Project Office)
Progress in technical development
After much work has now identified or fully developed solutions to all the known technical challenges on the plane. This includes the most talked about challenges that helmet, software development and the protection against lightning.
- We see that progress with the helmet is now so good that [they/we] are likely to go back to one solution at the next major milestone in April, and [they/we] will then scrap the backup solution which began its work last year. A Lightning Protection solution has now been agreed on and restrictions on flights in thunder storms will be lifted in 2015, concurrently with software version "2B" being installed in the aircraft. This is the software the U.S. Marine Corps will be operational with in 2015, and where shortly after the use of F-35 in hot military operations if necessary. The development of software in general, where we previously saw a backlog has now been dealt with [caught up on], and the development of Block 2B software is now on track to be installed in 2015. This shows that the measures taken just months back, are now showing results, says Klever.
Challenges remain, but also opportunities
Lieutenant Bogdan did during the presentation not hide the fact that there were still several areas where challenges remain. One area the partnership is now focusing especially on is "sustainment", ie operation and maintenance of aircraft. The costs in this area should put simply just go down, a job Norway will actively support.
- As one of the first users of the F-35 in Europe, Norway has an important role to play helping to define how a European version of the support and maintenance will take place. This will help to reduce the operating costs of the aircraft further, something Norwegian industry can contribute to.
The most recent estimates made by Norway, the lifetime cost of the F-35, is the estimated cost of 230 billion kroner in 2012 real value. Klever believe that these can actually be reduced further if efforts to reduce operating expenses succeed.
- When we have gone to Parliament, we have assumed what we think is the most probable cost, and the work involved in the program now can actually reduce this further. This is very positive, and instead of the cost overruns many have feared it may be that we see a decrease compared to early estimates, concludes Klever.
The illustration shows the status of the production of the F-35 as of February 2013. It shows that we now have almost caught up with the delay that occurred after the strike at the manufacturer Lockheed Martin in 2012 (Source: Joint Project Office)
If you would like to receive the whole presentation just get in touch - we lovwould like to go through it with you and send it electronically afterwards.
(maybe something for Spaz or Spud?
)
For more information or comments, contact pressure guard at the Defense Ministry in Tel 23096011 - fdinfo@fd.dep.no or communications Fighter aircraft program Change Lunde at 90853270 - endre.lunde@fd.dep.no .
Facts about the Norwegian procurement of F-35:
- Norway will acquire up to 52 combat aircraft of the type F-35 to ensure that the military will continue to perform its mission in the best way possible.
- The provision is estimated to cost 62.6 billion real 2013-kroner. The overall Norwegian cost estimates have been stable since 2008.
- The acquisition of the first four F-35 to be used for the training of Norwegian crews was decided in 2011. The first two of these will be delivered in the United States in 2015 and the last in 2016.
- The government intends to go to Parliament in the first half of 2013 for getting authorization to order the first aircraft to be delivered to Norway in 2017.
Press material from http://www.regjeringen.no/nb/dep/fd/tem ... ?id=715294
Slow But Steady Progress
Lower costs than expected and much lower estimates of future expenses were among the good news the new program director of the international F-35 program had in the bag when he on Thursday 21 February held an orientation briefing for partners during a summit in the United States. Lieutenant General Christopher Bogdan could include telling that cost estimates related to the so-called concurrency changes has been reduced by 30%, and that the actual cost so far has been far below even this level.
- I think there were many of those who have accepted early production aircraft breathed a sigh of relief when they saw those numbers, said Brigadier Morten Klever Deputy Chairman of the Norwegian fighter program and representing Norway in the meeting.
- This shows that concurrency changes, ie the need to go back and make changes in aircraft that are already built when the test program reveals deficiencies, has been shown to cost much less than first feared. The program has therefore revised down estimates for how much you should expect to spend on such changes in the future with 30%, and the actual costs incurred for such changes so far suggests that they may be even lower, explains Klever.
The illustration shows the reduction in estimated costs from 2011 (blue) and 2012 (red) - total estimates are reduced 30%. (Source: Joint Project Office)
- This is also very positive for Norway when it suggests that the need for such changes in the Norwegian aircraft will be very small, and perhaps even less than we have taken into account. It also suggests that the structure of the plane is not as immature as many critics claim.
The unit price is reduced
Lieutenant Bogdan also said that the cost of each aircraft has been reduced much faster than the current plan had assumed.
- Right now is the cost of F-35 is actually below where they had hoped to be at this time, so it's probably an indication that the trend is moving in the right direction. From the production line 6 (LRIP 6) will also aircraft ordered under the fixed-price contracts that we not risk getting any overruns in contract on the Norwegian aircraft, said Klever.
Norwegian aircraft will be delivered from the production line 7 (LRIP 7) and will be covered by such fixed-price contracts.
The curve shows the reduction in costs for each aircraft (without engine) in each production contract. The bottom line is the actual contracts. The middle line is the final cost for each aircraft (Source: Joint Project Office)
The curve shows the cost reduction over time for F-35 engine. The red curve shows the planned level, blue shows the engine cost has been on. (Source: Joint Project Office)
Progress in technical development
After much work has now identified or fully developed solutions to all the known technical challenges on the plane. This includes the most talked about challenges that helmet, software development and the protection against lightning.
- We see that progress with the helmet is now so good that [they/we] are likely to go back to one solution at the next major milestone in April, and [they/we] will then scrap the backup solution which began its work last year. A Lightning Protection solution has now been agreed on and restrictions on flights in thunder storms will be lifted in 2015, concurrently with software version "2B" being installed in the aircraft. This is the software the U.S. Marine Corps will be operational with in 2015, and where shortly after the use of F-35 in hot military operations if necessary. The development of software in general, where we previously saw a backlog has now been dealt with [caught up on], and the development of Block 2B software is now on track to be installed in 2015. This shows that the measures taken just months back, are now showing results, says Klever.
Challenges remain, but also opportunities
Lieutenant Bogdan did during the presentation not hide the fact that there were still several areas where challenges remain. One area the partnership is now focusing especially on is "sustainment", ie operation and maintenance of aircraft. The costs in this area should put simply just go down, a job Norway will actively support.
- As one of the first users of the F-35 in Europe, Norway has an important role to play helping to define how a European version of the support and maintenance will take place. This will help to reduce the operating costs of the aircraft further, something Norwegian industry can contribute to.
The most recent estimates made by Norway, the lifetime cost of the F-35, is the estimated cost of 230 billion kroner in 2012 real value. Klever believe that these can actually be reduced further if efforts to reduce operating expenses succeed.
- When we have gone to Parliament, we have assumed what we think is the most probable cost, and the work involved in the program now can actually reduce this further. This is very positive, and instead of the cost overruns many have feared it may be that we see a decrease compared to early estimates, concludes Klever.
The illustration shows the status of the production of the F-35 as of February 2013. It shows that we now have almost caught up with the delay that occurred after the strike at the manufacturer Lockheed Martin in 2012 (Source: Joint Project Office)
If you would like to receive the whole presentation just get in touch - we lovwould like to go through it with you and send it electronically afterwards.
(maybe something for Spaz or Spud?
)
For more information or comments, contact pressure guard at the Defense Ministry in Tel 23096011 - fdinfo@fd.dep.no or communications Fighter aircraft program Change Lunde at 90853270 - endre.lunde@fd.dep.no .
Facts about the Norwegian procurement of F-35:
- Norway will acquire up to 52 combat aircraft of the type F-35 to ensure that the military will continue to perform its mission in the best way possible.
- The provision is estimated to cost 62.6 billion real 2013-kroner. The overall Norwegian cost estimates have been stable since 2008.
- The acquisition of the first four F-35 to be used for the training of Norwegian crews was decided in 2011. The first two of these will be delivered in the United States in 2015 and the last in 2016.
- The government intends to go to Parliament in the first half of 2013 for getting authorization to order the first aircraft to be delivered to Norway in 2017.
Last edited by bumtish on 10 Mar 2013, 04:12, edited 1 time in total.
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Yes Please: "...If you would like to receive the whole presentation just get in touch - we lovwould like to go through it with you and send it electronically afterwards. (maybe something for Spaz or Spud? Very Happy)" Thanks 'bumtish' - PM sent just now to you.
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I had thought the LM price once production started (whenever that is) was as quoted ($67M allup - in dollars today not adjusted for future inflation? - whatever). 'maus92' you are quoting LRIP11 target price for FY 2017.
One of the endless price discussion thread pages here:
http://www.f-16.net/index.php?name=PNph ... c&p=246123
___________
And anyway I like this Oz ANAO estimate here:
http://www.f-16.net/index.php?name=PNph ... nao#246120
Repeated below:
Management of Australia’s Air Combat Capability—F-35A Joint Strike Fighter Acquisition ANAO Audit Report No.6 2012–13 | 24 Sep 2012
http://www.anao.gov.au/~/media/Files/Au ... 0OCRed.pdf (4.7Mb)
"...As at June 2012, the JSF Program Office estimated the Unit Recurring Flyaway (URF) cost of a CTOL F-35A aircraft for Fiscal Year 2012 to be US$131.4 million. That cost includes the baseline aircraft configuration, including airframe, engine and avionics. The URF cost is estimated to reduce to US$127.3 million in 2013, and to US$83.4 million in 2019. These expected price reductions take into account economies of scale resulting from increasing production volumes, as well as the effects of inflation. The estimates indicate that, after 2019, inflation will increase the URF cost of each F-35A by about US$2 million per year. However, these estimates remain dependent upon expected orders from the United States and other nations, as well as the delivery of expected benefits of continuing Will-Cost/Should-Cost management by the US Department of Defense...."
http://www.f-16.net/attachments/anaourf ... ic_810.gif
One of the endless price discussion thread pages here:
http://www.f-16.net/index.php?name=PNph ... c&p=246123
___________
And anyway I like this Oz ANAO estimate here:
http://www.f-16.net/index.php?name=PNph ... nao#246120
Repeated below:
Management of Australia’s Air Combat Capability—F-35A Joint Strike Fighter Acquisition ANAO Audit Report No.6 2012–13 | 24 Sep 2012
http://www.anao.gov.au/~/media/Files/Au ... 0OCRed.pdf (4.7Mb)
"...As at June 2012, the JSF Program Office estimated the Unit Recurring Flyaway (URF) cost of a CTOL F-35A aircraft for Fiscal Year 2012 to be US$131.4 million. That cost includes the baseline aircraft configuration, including airframe, engine and avionics. The URF cost is estimated to reduce to US$127.3 million in 2013, and to US$83.4 million in 2019. These expected price reductions take into account economies of scale resulting from increasing production volumes, as well as the effects of inflation. The estimates indicate that, after 2019, inflation will increase the URF cost of each F-35A by about US$2 million per year. However, these estimates remain dependent upon expected orders from the United States and other nations, as well as the delivery of expected benefits of continuing Will-Cost/Should-Cost management by the US Department of Defense...."
http://www.f-16.net/attachments/anaourf ... ic_810.gif
Last edited by spazsinbad on 10 Mar 2013, 05:16, edited 5 times in total.
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oh noes! I should have been more clear - the contact is the norwegian guy! the two lines belong together!
If you would like to receive the whole presentation just get in touch - we lovwould like to go through it with you and send it electronically afterwards.
(maybe something for Spaz or Spud? Very Happy)
For more information or comments, contact pressure guard at the Defense Ministry in Tel 23096011 - fdinfo@fd.dep.no or communications Fighter aircraft program Change Lunde at 90853270 - endre.lunde@fd.dep.no .
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- Location: Australia
English is my one and only language.
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GOOGLE TRANSLATION of the webpage above from Norwegian to English PDF is attached:
http://translate.google.com.au/translat ... d%3D715294
- It goes slowly forward 21 Feb 2013
http://translate.google.com.au/translat ... d%3D715294
- It goes slowly forward 21 Feb 2013
- Attachments
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Google Translate NORWEGIAN to ENGLISH Feb 2013 PartnerBrief.pdf- (447.4 KiB) Downloaded 1098 times
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maus92 wrote:A quick look at the numbers, and you can see how LTG Bogdan computes his "about $90M" estimate for F-35As ($77M + 12M.) As for LM's continued proclamation of "$67M, including engine," not so evident.
But that chart and target end in FY17. The programmed build numbers increase beyond '17.
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quicksilver wrote:maus92 wrote:A quick look at the numbers, and you can see how LTG Bogdan computes his "about $90M" estimate for F-35As ($77M + 12M.) As for LM's continued proclamation of "$67M, including engine," not so evident.
But that chart and target end in FY17. The programmed build numbers increase beyond '17.
Yes, but the downward curve in the cost trend flattens out at about FY2018/9 and begins to rise again, so shaving off another $20M or so just seems way optimistic. It would be huge if they could do it though.
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maus92 wrote:quicksilver wrote:maus92 wrote:A quick look at the numbers, and you can see how LTG Bogdan computes his "about $90M" estimate for F-35As ($77M + 12M.) As for LM's continued proclamation of "$67M, including engine," not so evident.
But that chart and target end in FY17. The programmed build numbers increase beyond '17.
Yes, but the downward curve in the cost trend flattens out at about FY2018/9 and begins to rise again, so shaving off another $20M or so just seems way optimistic. It would be huge if they could do it though.
The curve is in then-year $. In constant $ it is flat after 2017-2018.
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bumtish wrote:maus92 wrote:quicksilver wrote:maus92 wrote:A quick look at the numbers, and you can see how LTG Bogdan computes his "about $90M" estimate for F-35As ($77M + 12M.) As for LM's continued proclamation of "$67M, including engine," not so evident.
But that chart and target end in FY17. The programmed build numbers increase beyond '17.
Yes, but the downward curve in the cost trend flattens out at about FY2018/9 and begins to rise again, so shaving off another $20M or so just seems way optimistic. It would be huge if they could do it though.
The curve is in then-year $. In constant $ it is flat after 2017-2018.
I see that, but the point is that large price decreases do not really occur after FY18, which is why the disparity between the program office estimates and LM estimates is stark - $89M vs $67M - roughly 25% difference - unless LM is using something other than BY$12 dollars, which in itself is misleading.
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